In Re Nevill

Facts

D was admitted to practice law in the State of Arizona in 1964. Bly is a retired pharmacist and a licensed real estate broker. He is a knowledgeable and sophisticated real estate investor but has no legal training. Bly retained D in 1971, and they had an ongoing attorney-client relationship until approximately 1981. D was not Bly's sole legal counsel. Bly frequently purchased real estate and either exchanged it or sold it on deferred payments evidenced by note or contract. Bly exchanged Camp Phoenix for property in Chandler Heights which he simultaneously sold to D in exchange for D's promissory note. D represented both Bly and another party in the original purchase of Camp Phoenix and D's subsequent representation of the other party in a bankruptcy action. D, as part of the transaction, also held himself out as a partner in a partnership which never existed. Bly operated Camp Phoenix as a motel and trailer park and then sold it to the manager, a Mr. Cummings, in 1975. D prepared the documents necessary to effectuate this transaction. Bly thought that D was his lawyer in this matter. Cummings had no independent legal advice and testified that he, too, considered d to be his lawyer. D never clarified who he thought he represented in this transaction. Cummings thereafter defaulted on his obligations to Bly, who then asked D to represent him in a lawsuit to regain possession of the property and to obtain a deficiency judgment from Cummings for the balance due. D refused. D referred him to another attorney. Bly regained possession of Camp Phoenix, and on November 5, 1976 obtained a judgment against Cummings for $60,550.25. D later obtained an interest in the Camp Phoenix by purchasing options from Bly. D gave his promissory note for $5,000, eventually paid half by jewelry and half by credit against legal fees which Bly owed to D. D purchased the option based on plans to develop the property as a government motor pool. However the government subsequently purchased an adjacent property. D drafted a second option, hoping to develop the property with mini-warehouses. This development would have required that Bly subordinate his security for D's debt to a construction loan. D was unable to make the financial arrangements necessary to bring the project to fruition. Lau agreed to purchase Camp Phoenix from Bly in exchange for property they owned in Chandler Heights plus $25,000 in cash. D initiated this transaction, seeking permission from Bly to sell his option to the Lau group. The transaction was structured so that Lau paid Bly $25,000 cash and conveyed the Chandler Heights property to him in return for his conveyance of Camp Phoenix to them. Bly transferred the Chandler Heights property to D in exchange for D's note for $257,774. Bly's participation was conditioned upon D's purchase of the Chandler Heights property. D drafted the contract for all the parties. D testified that he told them that as a principal he could not represent any of them in the transaction and that they should each get independent counsel. Lau was advised by a CPA and independent legal counsel. Bly was not. Bly stated that he thought D represented him in these transactions and denied that D advised him to the contrary. He admitted knowing that D and he had adverse interests. Bly complained that D's personal obligation on the instrument evidencing the purchase price had been omitted from the agreement. Bly was concerned about having to take possession of the property on a default of a third party purchaser. D responded by confirming, on stationery bearing the name of Ferrin & Neville, the oral understanding that he was personally obligated for the amount of $257,774. D sold the Chandler Heights property to Reeder and Shill who made the interest payments to Bly as required. D also received at least $42,000 in cash from the Reeder/Shill sale, none of which was paid to Bly. Bly learned of the sale and wrote D to demand his pro rata share of the proceeds. Bly then filed a complaint with the State Bar. The Committee voted to suspend D for 90 days. D appealed. 

Issues

Rule of Law

Holding and Decision

Legal Analysis

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